Committee publication · Correspondence · 14 July 2026
Correspondence from Consumer Legal on motor finance compensation scheme, dated 9 July 2026
From: Treasury Committee
Summary
The Consumer Legal Association writes to the Treasury Committee Chair expressing serious concerns about the FCA's regulatory approach to claims management services, particularly in the context of motor finance compensation. The CLA argues that the FCA's framing of the industry as plagued by malpractice unfairly tarnishes reputable law firms and consumer advocates, risks undermining public confidence in accessing specialist advice for financial redress, and fails to distinguish between ethical practitioners and bad actors.
Key findings
- The FCA's communications on claims management practices create an inaccurate and damaging perception of widespread malpractice across the claimant industry, rather than targeting specific firms responsible for poor conduct.
- The CLA contends that specialist legal representation is vital for victims of financial mis-selling seeking redress and that regulatory messaging threatens to deter consumers from seeking professional support.
- The CLA argues the FCA should remain agnostic between regulated professional support and self-help claims, and should not use broad-brush criticism of an entire sector when only a small minority of actors behave poorly.
- The regulatory approach risks benefiting unscrupulous financial services providers by reducing transparency of misconduct and undermining the claimant industry's capacity to hold firms accountable.
- The CLA requested meetings with the FCA and SRA on 7 July to identify specific problematic practices and firms, and seeks dialogue with the Treasury Committee.
Tone
AdversarialTopics
Key actors
Dame Meg Hillier, Nikhil Rathi, Financial Conduct Authority (FCA), Consumer Legal Association (CLA), David Whitmore, Solicitors Regulation Authority (SRA)
Notable line
“… whose services are important to mis-treated consumers do not deserve to be portrayed as being under suspicion or at fault purely by association with the small minority who do not behave well …”
Key Quotes
“… the broader impression given by the FCA is of widespread malpractice, something we do not believe to be at all accurate.”
“Without it, victims of financial mis-selling would have no recourse to specialist advice when 1 https://committees.parliament.uk/committee/158/treasury-committee/publications/3/correspondence/ …”
“The FCA has not, for example, looked to review and besmirch the entire banking industry because of the motor finance scandal perpetrated by a limited number of lenders it oversees.”
“Currently, and as the various recent announcements show, this is not the case and could serve to reduce trust in the services reputable firms provide.”
Source · parliament.uk record ↗